Ask any cubicle dweller what they fear most in the current recessionary climate of lay-offs and pay cuts, and one of the more likely answers will be the dreaded letter from human resources (HR). The corporate human resources function, which has evolved from a transactional role to its more dynamic form today, has itself not been spared by the economic calamity ravishing the globe, according to experts and consultants. Sonali Kumar, who heads the leadership consulting practices for Hewitt Associates, noted that with the global downturn, the daily tasks handled by in-house HR practitioners had changed dramatically, leaning towards activities that helped the company save money. The firm conducted a poll of more than 80 local employers across 14 industries last October, and again in March, and found that an increasing number of companies had bowed to cost-cutting measures to stay afloat. In the more recent poll, it found that 67 per cent of respondents said their company had imposed hiring freezes, up from 54 per cent in October. Twenty-two per cent said they had laid off workers, compared to 18 per cent in October. For the surviving employees, 40 per cent of respondents said their companies had gone ahead with a freeze on salaries, compared to 11 per cent before. Training and development, usually one of the first items that went out the door when the economy headed south, was being cut, with more than half of the respondents in the recent survey saying they had reduced it, and replaced it with more cost-effective measures such as in-house peer mentoring, coaching, or e-learning. Some organisations had taken the opportunity to rationalise their HR function, Ms Kumar said. During boom times many companies were too busy bringing in new people to help the business grow, but many had taken the lull in activity to ensure that their HR policies aligned with the market and with the legal and regulatory environments. Meanwhile, with people being laid off and staff morale plunging, most HR professionals have had to refocus their attention towards communication. 'In a state of flux, people have questions all the time, whether it's in relation to benefits or pay or about the company,' Ms Kumar said, adding that even for a company making redundancies, explaining to surviving employees what was happening, and painting a picture of how they fitted into the corporate future, went a long way to shoring up staff loyalty. Another area of focus that many HR departments were likely to turn to during the difficult operating environment was retention of their high-potential employees. Whereas Hewitt's survey found that training had been slashed across the board, Ms Kumar noted that it was not unusual for companies to keep their training budgets for the most promising employees, and in some cases even increase their funding, for fear of losing them to competitors. Recruitment firm Talent2's Hong Kong chief executive Martin Nicholls agreed that one of the more logical effects of the downturn was that HR had been forced to change from being geared towards recruiting and hiring new people to reorganisation, downsizing and outplacement. He said some had experienced a steep learning curve in making that switch. Asia, Mr Nicholls said, had experienced a lengthy boom, and now that the global recession had forced companies to make redundancies, some HR departments had found that they didn't have all the answers and were often forced to seek external advice on outplacement and legal issues in corporate restructuring. 'I was working with an organisation that needed to make quick redundancies right away across the region, and their HR team were expatriates who weren't based in the region. So they didn't know the legalities, what had to be communicated, or what had to be paid out,' Mr Nicholls said. Mr Nicholls, whose firm also handles outsourced HR functions such as payroll, noted that an increasing number of firms were seeking to outsource certain parts of the HR function in order to save costs. Peter Promnitz, Asia-Pacific regional head for human resources consultancy Mercer, said that one structural change was that HR had been elevated to the C-suite of top executives at many organisations. He cited the 'war for talent' in the past five years as the main reason for this promotion. Because the demand for talent exceeded supply during the boom times, organisations had devoted more resources to attraction and retention issues to ensure they had the right talent working for them, and to prevent them from being lured away by competitors. HR earned a seat at the head table because during the periods of economic growth, attraction and retention became the number one priority for corporate chief executives, and they had to draw on the advice from their HR teams to make it happen. Because of renewed interest in retention, he said many corporate heads realised they had to find a way to retain key talent they had attracted in the past few years, so that they could take advantage of the rebound when it happened. 'They are in a much stronger position than four or five years ago,' Mr Promnitz said, adding that another reason for HR's new-found organisational importance could be explained by structural changes in the world economy. He said that with many developed countries having shifted from manufacturing-based economies to ones based on services, intellectual and human capital had become increasingly important to organisations. In knowledge-dependent organisations, such as banks, brokerages, investment houses, and consultancies, HR was likely to become more influential due to its role as keeper of human capital containing its repository of knowledge. Mr Promnitz said that this was likely to lead to more employee-centric offices for white collar workers, with workplace-friendly policies such as flexible working arrangements and a continued emphasis on work-life balance. As a result, employee engagement would also remain important, he said. This was because companies not only wanted their employees to stay with them for longer, they also wanted them to be more productive by making the office a 'home away from home'.